OREANDA-NEWS. The Board of Directors of OAO MOSENERGO approved the Regulations on Insurance Coverage of the Company for the period from 1 January 2008 to 1 January 2011". The Regulations establish general principles for organising insurance coverage for the Company, possible types of insurance, and also the normative standards and procedure for planning insurance coverage.

In accordance with the Regulations, insurance companies will be selected through a tender. The insurance broker OAO Strakhovoi Broker Energozashita has been appointed to organise the tender.

The Board of Directors of OAO MOSENERGO has taken note of the information on the results of the implementation of the Regulations on the Procedure for Using Cash Remitted to the Accounts of the Company as a Result of the Additional Share Issue.

The Board of Directors approved the schedule for Cash Flows of Subjects of Investments for the fourth quarter of 2007 based on the construction of combined-cycle power generating units [PGU] at CHP-21, CHP-26 and CHP-27. According to the approved schedule, RUB 11,737,698 will be allocated to finance construction of the power units in the fourth quarter.

The regulations were drafted to monitor the intended expenditure of funds allocated for the construction of four gas-steam power generating units at CHP-21, CHP-26 and CHP-27.

At present the 1st stage of the Investment Programme of OAO MOSENERGO I – the construction of four combined cycle gas-steam power units with an installed capacity of 1,770 MW at CHP-21, CHP-26 and CHP-27 – is being financed with the proceeds from the issue of additional Company shares to Gazprom in April 2007.

The Board of Directors of OAO MOSENERGO has approved use of the proceeds from the Company’s additional share issue to make up the shortfall in financing for assets stipulated in the Investment Programme in 2007, amounting to no more than RUB 2.28 billion, including compensation for connection charges in 2008-2009.

According to resolution No. 39 of the Regional Energy Company of the city of Moscow of 8 September 2006, OAO MOSENERGO plans to obtain approximately RUB 4.7 billion in revenues in 2007-2010 from connection charges. In 2007 revenues from connection charges have amounted to RUB 453,245 million.

The Board of Directors of OAO MOSENERGO has taken note of the information on the strategy of the Company’s operations on the heat power market.

OAO MOSENERGO plans to resolve the following tasks on the heat power market:
Increase heat power generation at efficient sources of generating capacity – the CHP of the Company,
Transfer the heat load from inefficient boiler plants to the CHP of OAO MOSENERGO,
Supply heat power during the summer (non-heating) period with the CHP of OAO MOSENERGO,
Develop the heat generating capacities of OAO MOSENERGO on the basis of state-of-the-art gas-steam technologies,
Develop the sales and distribution of thermal power, establish a thermal power supply subsidiary and associate,
Establish its own heat power grid company or transfer the functions to a thermal power supply subsidiary and associate,
Develop service, repair, information services for clients of OAO MOSENERGO.

The generating company OAO MOSENERGO has 39,000 MW of installed thermal power capacity. All the Company’s power plants are combined heat and power plants, in other words the same equipment is used to generate both thermal power and electricity. The CHP of OAO MOSENERGO account for 76% of Moscow’s heat power requirements. OAO MOSENERGO is the largest heating system in the world. In 2006, the thermal power produced by the CHP of the Company was consumed by 15,228 subscribers. The connected heat load of company consumers in 2006 increased by 531,3 Gcal/hr to 33,965.3 Gcal/hr by the start of 2007.

The Board of Directors of OAO MOSENERGO approved the establishment of a 100% subsidiary, whose main line of business will consist of thermal power supply services. The establishment of such a company will enable OAO MOSENERGO to improve heat power sales performance figures, by targeting consumers, to monitor the connections of consumers, increase oversight of expenditure on heat and transfer fluids and as a result increase OAO MOSENERGO’s share of the heat power sales market.

The Board of Directors of OAO MOSENERGO has taken note of information on measures to prepare projects to be implemented in accordance with the Kyoto Protocol within the scope of the approved Programme for Implementing the Environmental Policy of the Company.

The Non-Profit Investment Environmental Organisation Energy Carbon Fund assessed the potential reduction in greenhouse gas emissions of the CHP of OAO MOSENERGO, performed a stock-take of greenhouse gas emissions for 1990-2005 and developed preliminary information on projects:
Retooling of CHP-9, including the commissioning of a gas turbine unit with a 62 MW electric capacity,
Construction of Power Generating Unit № 11 PGU-450Т at CHP-21,
Construction of Power Generating Unit № 8 PGU-420 at CHP-26,
Construction of Power Generating Unit № 4 PGU-450Т at CHP-27.

The projects were selected due to compliance of the deadlines for the start of construction and commissioning of capacity with the time span since the entry into force of the Kyoto Protocol in 2006 until 2012.

The Board of Directors of OAO MOSENERGO has taken note of the information of Company management on the terms for implementing the Company Investment Programme for 2007-2011, including:
Calculation of the financial viability of the proposed new construction facilities,
Assessment of the ability to provide sufficient gas supplies to the proposed construction facilities as part of the implementation of Stage III of the Investment Programme,
Elaboration of the issues related to power distribution for the facilities included in Stage III.

The financial viability of a project is calculated on the basis of a forecast on utilisation of power capacity of at least 6,000 hours a year. All the projects covered by Stage III of the Investment Programme have a recoupment period of 9-11 years.

In view of planned expenditures on coal and fuel oil, supplies of natural gas in 2008-2011 at CHP of OAO MOSENERGO, based on the long-term gas supply contract with OOO Mezhregiongaz dated 12 July 2007 for the period 2008-2012, and also in accordance with the Agreement between OAO RAO UES of Russia and OAO Gazprom, additional supplies of gas to the power generating units to be built as part of Stage II of the Investment Programme will be required in 2011: an additional 810 million cubic metres of natural gas will be required (equivalent to no more than 3% of the planned annual consumption of gas, excluding back-up types of fuel).

All the power-generation units to be built as part of Stage III of the Investment Programme have the technical ability to meet power distribution requirements. Power distribution issues are developed by the Mosenergoproekt institute based on plans drafted by the EnergoSetproekt institute and commissioned by OAO FSK [Federal Grid Company]. The power-generating units to be built at CHP-16 and CHP-20 will provide power to the 222 kW ring. Power generating unit № 5 of PGU-450Т at CHP-27 and power-generating unit PGU-420 at CHP-25 will provide power to the 500 kW ring.

The Board of Directors of OAO MOSENERGO has instructed the Executive Committee of the Company to agree on the power distribution schemes of the power generating units to be built as part of Stage III of the Investment Programme with OAO FSK and also synchronise construction deadlines of power units and power distribution transmission lines.

The Board of Directors of OAO MOSENERGO approved in general Stage III of the Investment Programme of the Company for 2007-2011 and instructed management of the Company to revise the programme of Stage II of the Medium-Term Investment Programme, taking into account the need to prepare a feasibility study on investments, the distribution of power, gas supplies, and also coordination of the schedule for commissioning new facilities with the energy development programme of Moscow Government.

Within the framework of implementation of Stage III of the Investment Programme, OAO MOSENERGO plans to build fourth-generation gas power units with an efficiency factor of up to 59%, and also one power unit PGU-450Т at power plants located in the city centre and the sites of mass residential housing developments (CHP-12, CHP-16, CHP-20, CHP-25 и CHP-27).

Stage I of the Investment Programme of OAO MOSENERGO – the construction of four gas-steam power units with total installed capacity of 1,770 MW at CHP-21, CHP-26 and CHP-27 – is being financed with the proceeds off the Company’s additional share issue in April 2007, which was taken up by Gazprom.

Stage II of the Investment Programme of OAO MOSENERGO – the construction of gas-steam capacities at existing blocks of CHP-9 and CHP-12 – is being financed with RUB 6,519 billion of internal funds of the Company (depreciation and profits) and also loans. 

The technical development strategy of OAO MOSENERGO, which seeks to meet forecast demand for electricity, is based on the commissioning of highly-efficient combined -cycle power generating units (PGU) with an efficiency factor in the condensation cycle of 57-59% (compared to an efficiency factor of no more than 38% at steam turbine power plants). It is also based on the replacement of combined heat and power equipment with 90 atmospheres and below, which has come to the end of its service life, with gas-steam cycle equipment. Highly efficient gas-steam power units will make it possible to use 25% less gas and at the same time reduce by a third hazardous emissions into the atmosphere.

OAO MOSENERGO is currently building four state-of-the-art gas-steam power units with total installed capacity of 1,770 MW at CHP-21, CHP-26 and CHP-27 as part of Stage I of the Programme for Development and Re-equipment, and also preparing sites and performing design work for the installation of gas turbines and gas-steam power units at CHP-9, CHP-12, CHP-16 and CHP-20 within the scope of stages II and III of the Programme.

Pre-commissioning work continues at power unit № 3 PGU-450Т at CHP-27. At the same time the steel structure is being installed for the main block of power unit № 4 PGU-450Т CHP-27.At CHP-21 the steel structure and wall panels of the main block are being installed. Work is continuing on the construction of the turbine foundation of power unit № 11 PGU-450Т.

The generating company OAO MOSENERGO consists of 17 power plants with installed electricity capacity of 10,600 MW and thermal capacity of 39,000 MW. OAO MOSENERGO power plants account for 85% of the electricity requirements of Moscow and Moscow Oblast. OAO MOSENERGO is the largest thermal generation company in Russia.